Kochi: Even while reeling under the Covid-induced financial crisis, the film sector in the state is confronting a new challenge in the form of GST notices.

The notices have asked distributors, who have been paying 12 per cent GST from 2017 to pay 18 per cent. Several of the prominent distribution companies in the film sector have received the notices.

But the film industry points out that 12 per cent GST is the applicable rate, with 6 per cent each for the central GST and state GST, as per the 2017 GST notification. This category has been included in the Services Accounting Code (SAC) 9973. And that they have been duly paying GST as per the notified rate.

But the GST department has now demanded that 18 per cent should be paid on the grounds that there were irregularities in calculating GST. The officials contend that the SAC code 9973 was not applicable to the distributors and instead the tax has to be calculated as per another code.

However, the film industry is of the view that if there is a flaw in the SAC code, which is applicable for all GST transactions, then it is the GST council that has to clarify this. No such notification has been issued. Such a notification cannot be issued at the local level either. They also alleged that the GST notice does not have any clear explanation and that even the officials have no clarity over this.

The film sector questions as to what irregularity has been found now that had not existed while 12 per cent GST was being paid these four years.

The film sector has been in a severe crisis due to the Covid lockdown. The theatres have been shut for a long period and several films are awaiting release. The notices have come as a fresh blow even when the film industry is reeling under a severe financial crisis.

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